New Delhi: Global liquefied natural gas (LNG) prices could witness a sharp rise in the coming months as stronger demand from Asia and Europe’s urgent need to rebuild gas inventories tighten supplies, according to a new report by Morgan Stanley.
The brokerage expects the Asian LNG benchmark price to climb to $25 per million British thermal units (mmBtu) during the third and fourth quarters of the year. This would represent an increase of more than 30 per cent from current forward market levels and mark the highest price since early 2023.
According to the report, LNG prices are likely to remain elevated even if geopolitical tensions in the Middle East ease in the near future. A key concern remains disruptions around the Strait of Hormuz, a crucial shipping corridor for LNG exports from major producers such as Qatar and the United Arab Emirates.
The report noted that natural gas demand has started recovering across major Asian economies, particularly India and China, while European nations face mounting pressure to replenish storage facilities ahead of the winter season.
Analysts said relatively weak LNG imports during March and April had helped cushion the impact of supply disruptions. However, with summer approaching and energy consumption rising, demand is once again gaining momentum.
Weather forecasts predicting above-normal temperatures across several parts of Asia in June and July are expected to further boost LNG consumption, especially for air-conditioning and cooling needs.
Despite challenges linked to the Persian Gulf region, global LNG supply has remained relatively resilient. Increased output from production facilities in other parts of the world and the addition of new export capacity in United States and other North American markets have helped offset some of the supply constraints.
As a result, global LNG supply in May was only about one million tonnes lower than the volume recorded during the same month last year, the report highlighted.
Europe, meanwhile, remains a key factor influencing global gas markets. Although gas demand on the continent softened last month, storage levels are still well below normal. Current inventories are estimated to be around 17 per cent lower than a year ago and roughly 25 per cent below the 10-year average, increasing the likelihood of substantial LNG purchases in the months ahead.
With Asian consumption recovering and Europe preparing for winter, analysts believe the global LNG market could remain tight through the second half of the year, keeping prices under upward pressure.
With inputs from IANS